Here's where DW and I are re: ACA PTCs
We are draining an inherited IRA this year; this will raise our taxable income and reduce PTCs but not eliminate them as the cliff is suspended for 2025.
We expected this to take us below the cliff (regardless of whether it resumes in 2026), but the lone HSA-compliant ACA plan went away in 2025.
With interest/cap gain distributions from the taxable index stock fund accounts and interest from FI in the taxable account, we expect to be dancing around the cliff in 2026, if it resumes.
So, looking ahead to a possible scenario where we don't have an HSA-compliant ACA plan and the cliff resumes in 2026 - what (if any) good strategies are there? I recall at least one forum member mentioning that, prior to the cliff suspension, they managed ACA income to be compliant every other year. [My search-fu has failed; I haven't been able to locate that post(s).]
My thought is to transfer enough FI $$ to zero-coupon bonds (perhaps STRIPS) to take income safely beneath the cliff and then be above it the next year. Rinse and repeat as necessary. [This would also have the good secondary effect of having the gains taxed at the LTCG rate, provided the bonds are held for >1 year.]
Is this a reasonable strategy? Am I missing other options? [The stock index funds have substantial unrealized capital gains.]
We are draining an inherited IRA this year; this will raise our taxable income and reduce PTCs but not eliminate them as the cliff is suspended for 2025.
We expected this to take us below the cliff (regardless of whether it resumes in 2026), but the lone HSA-compliant ACA plan went away in 2025.
With interest/cap gain distributions from the taxable index stock fund accounts and interest from FI in the taxable account, we expect to be dancing around the cliff in 2026, if it resumes.
So, looking ahead to a possible scenario where we don't have an HSA-compliant ACA plan and the cliff resumes in 2026 - what (if any) good strategies are there? I recall at least one forum member mentioning that, prior to the cliff suspension, they managed ACA income to be compliant every other year. [My search-fu has failed; I haven't been able to locate that post(s).]
My thought is to transfer enough FI $$ to zero-coupon bonds (perhaps STRIPS) to take income safely beneath the cliff and then be above it the next year. Rinse and repeat as necessary. [This would also have the good secondary effect of having the gains taxed at the LTCG rate, provided the bonds are held for >1 year.]
Is this a reasonable strategy? Am I missing other options? [The stock index funds have substantial unrealized capital gains.]